Fed hikes rates, points to 2 more increases by end of 2018

The Federal Reserve has hiked U.S. rates yet again,... by its usual 25 basis points.

The increase is the seventh since 2015,.... and second this year alone,... with more in the pipeline in the coming months.

This comes as the new chair of the Fed said the U.S. economy is finally picking up a head of steam.... after several years in the doldrums.

Kim Hyesung reports.

The U.S. Federal Reserve has raised its benchmark interest rate for the second time this year by a quarter percentage point to a range of 1-point-75 percent to 2 percent.

It's the seventh hike since 2015.

And a majority of policymakers say they now expect a total of four interest rate increases this year, after they had been split about whether to raise rates three or four times.

The Fed also dropped its pledge to keep rates low enough to stimulate the economy "for some time", reflecting a U.S. economy that's getting stronger.

"Economic growth appears to have picked up in the current quarter, largely reflecting a bounce back in household spending. Business investment continues to grow strongly and the overall outlook for growth remains favorable. Fiscal policy is boosting the economy. Ongoing job gains are raising incomes and confidence."

Quarterly economic projections released at the meeting show Fed officials expect the economy to grow two-point-eight percent this year, up zero-point-one percent from its forecast in March.

U.S. unemployment fell to three-point-eight percent in May, the lowest since 2000, signaling the Fed is at or near its maximum employment goal.

Inflation is also snapping into line, with fresh projections Wednesday indicating it would run above the Fed's two percent target, hitting two-point-one percent this year and remaining there through 2020.

While the course of U.S. rate hikes remains gradual, the upbeat economic projections and slightly tighter pace of monetary easing is raising concern among emerging economies.

In recent months, emerging economies have been seeing capital outflows and their currencies weaken against the stronger greenback....contributing to currency crises in countries such as Argentina, Turkey and Brazil.

Officials at the European Central Bank are set to meet on Thursday to discuss for the first time when to end their bond-purchasing program.

The Fed's decision is also putting more pressure on South Korea to raise rates, with the U.S.-Korea rate gap now at zero-point-five percent.